* others involve recording or retrieving data (making a booking, enrolling a student at university looking up results etc)

Most individual transactions are relatively simple, but in most organisations, there are very large numbers of them - so speed and efficiency are important considerations.

What is a TPS?

A transaction is any business-related exchange such as a payment to an employee, a sale to a customer, and a payment to a supplier.

- A Transaction Processing System (TPS) is an organized collection of people, procedures, databases, hardware and software to record completed business transactions.

- Most TPSs consist of all the components of a CBIS including databases, telecommunications, people, procedures, software and hardware.

- For most organizations, the TPS is the basis of the day-to-day activities that occur in the normal course of business, adding value to its products or services.

Transactions

Transaction processing is often the core of most major activities in organisations and the systems that collect this data often support other systems that might be decision support, management information or executive information.

A transaction is a fundamental unit of activity in organisations and are generally indivisible. They often involve multiple steps, but if any of the steps fail then the whole transaction cannot proceed

Analysing transaction patterns and volumes of transaction data is an important middle management activity in any business process.

Objectives of a TPS

&uml;Increase labor efficiency

&uml;Capture, process and store transactions and produce output

&uml;Maintain error-free data input and processing

&uml;Ensure data and information integrity

&uml;Produce timely documents and reports

&uml;Provide increased and enhanced service

&uml;Increase customer loyalty

&uml;Achieve competitive advantage

Early systems

Typically, transaction processing business processes were among the first to be automated/computerised in most organisations, thus a lot of this early work with this type of system provides the foundation for current thinking about information systems.

The reason behind this is that:

* computer equipment was relatively expensive in these early days

* these systems were among the easier to create

* small savings in the costs to process large numbers of transactions added up to significant amounts that would cover the costs of the expensive equipment

* few other business processes within typical organisations could provide these benefits

At this point, it is also worth noting that centralised systems were initially easier to control and could achieve economies of scale. Grosch's Law claimed that computing power was proportional to the square of the cost of the processor - this favoured ever larger centralised mainframes over smaller distributed systems. This generally meant that these early transaction processing systems were co-located on one large central mainframe.

Other TPS features

A key feature of most of these systems are the methods used to streamline the processing:

* one example is the use of bar codes - these speed up data capture and make it much more reliable. Without these, it can often be uneconomic to capture this data

* another example is the transferring of data entry to the customers of the organisation - bank customers using automatic teller machines are effectively doing the data entry for the bank; many Internet/e-commerce based applications are using the customers for data entry

Other key features of transaction processing systems include controls and reports:

* reports are designed to give management an overview of the transactions performed, and are often used for decision making purposes

Basic structure of transaction processing systems

The following is a simple activity diagram illustrating the basic structure of typical transaction processing systems.

Transaction Processing Activities

&uml;Data Collection is the process of capturing and gathering all data needed to complete one or more transactions. Can be done manually, or using devices like scanners and point-of-sale equipment.

&uml;Data Editing is the process of checking data for validity and completeness.

&uml;Data Correction is the process of reentering mis-keyed or mis-scanned data that was found during the data editing.

&uml;Data Manipulation is the process of performing calculations and other data transformations like classifying data and sorting files.

&uml;Data Storage is the process of placing transaction data into one or more databases.

&uml;Document Production is the process of creating reports and outputting records. Output can be printed on paper (hard copy) or displayed on the screen (soft copy).

Typical transaction processing systems

Many commercial organisations have as their core business the selling of products or services. These businesses are founded around four key information systems that have transaction processing as their major component: